Organizational Design: A Step-by-Step Approach

276 Pages·2011·1.927 MB·English

by  Richard M. Burton, Børge Obel, Gerardine DeSanctis

Organizational Design
In today’s volatile business environment, it is more important than ever
that managers, whether of a global multinational or a small team, should
understandthefundamentalsoforganizationaldesign.Writtenspecifically
for executives and executive MBA students, the new edition of this
successful book provides a step-by-step “how to” guide for designing an
organization. It features comprehensive coverage of the key aspects of
organizational design, including goals, strategy, process, people,
coordination, control, and incentives. These aspects are explained through
theuseofauniqueseriesof2(cid:1)2graphsthatprovideanintegrated,spatial
way to assess and plan organizational design. The new edition features a
number of important improvements, including a new framework for
understanding leadership and organizational climate, the introduction of
the concept of manoeuvrability, and a completely new chapter examining
joint ventures, mergers, partnerships, and strategic alliances.
Richard M. Burton is Professor of Strategy and Organization at the Fuqua
School of Business, Duke University.
Børge Obel is Professor of Organization and Director of the
Interdisciplinary Center for Organizational Architecture, Aarhus
University.
Gerardine DeSanctis was Thomas F. Keller Professor of Business
Administration at the Fuqua School of Business, Duke University.

Organizational
Design
A STEP-BY-STEP APPROACH
Second Edition
Richard M. Burton
Børge Obel
Gerardine DeSanctis
CAMBRIDGE UNIVERSITY PRESS
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Firsteditionpublished2006
Secondeditionpublished2011
PrintedintheUnitedKingdomattheUniversityPress,Cambridge
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Burton,RichardM.
Organizationaldesign:astep-by-stepapproach/RichardM.Burton,
BørgeObel,GerardineDeSanctis.–2nded.
p. cm.
Includesbibliographicalreferencesandindex.
ISBN978-1-107-00448-1–ISBN978-0-521-18023-8(pbk.)
1. Organization. 2. Corporateculture. 3. Psychology,Industrial.
I.Obel,Børge. II. DeSanctis,Gerardine. III. Title.
HD31.B85232011
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ISBN978-0-521-18023-8Paperback
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Contents
List of figures page x
List of tables xii
Preface to first edition xiii
Preface to second edition xv
An outline of the step-by-step approach xvii
Step 1
GETTING STARTED 1
1 Define the scope of the organization and assess its goals 3
Introduction: The executive challenge of designing the organization 3
Overview of this book 4
The information-processing view 6
Select an organization for analysis 9
Define the scope of the organization 9
Assess the organization’s goals 11
Diagnostic questions 14
Misfits and balancing competing design dimensions 15
Summary 17
Glossary 18
Where are you in the step-by-step approach? 18
Step 2
STRATEGY 21
2 Strategy 23
Introduction 23
Reactor 25
Defender 26
Prospector 28
Analyzer without innovation 29
Analyzer with innovation 31
Diagnostic questions 32
Fit and misfits 35
vi Contents
Summary 36
Glossary 37
3 Environment 38
Introduction 38
Calm environment 45
Varied environment 46
Locally stormy environment 47
Turbulent environment 48
Diagnostic questions 48
Fit and misfits 51
Summary 53
Glossary 53
Where are you in the step-by-step approach? 54
Step 3
STRUCTURE 57
4 The configuration and complexity of the firm 59
Introduction 59
Configuration 60
Simple configuration 61
Functional configuration 63
Divisional configuration 65
Matrix configuration 68
Organizational complexity 71
Blob 72
Tall 73
Flat 74
Symmetric 75
Diagnostic questions 75
Fit and misfits 77
Summary 83
Glossary 83
5 Distributed organizations 85
Introduction 85
Structures for spanning geography 87
Global 89
International 90
Multi-domestic 91
Contents vii
Transnational 93
Structures for managing knowledge exchange 94
Ad hoc communications 96
Informated 97
Cellular 97
Network 98
Diagnostic questions 99
Fit and misfits 102
Summary 105
Glossary 105
Where are you in the step-by-step approach? 106
Step 4
PROCESS AND PEOPLE 109
6 Task design 111
Introduction 111
Orderly 115
Complicated 116
Fragmented 117
Knotty 118
Diagnostic questions 119
Fit and misfits 120
Summary 123
Glossary 123
7 People 124
Introduction 124
Shop 127
Factory 128
Laboratory 129
Office 130
Diagnostic questions 131
Fit and misfits 132
Summary 135
Glossary 136
8 Leadership and organizational climate 137
Introduction 137
Leadership style 138
Maestro 139
viii Contents
Manager 140
Leader 141
Producer 141
Organizational climate 142
Group 145
Internal process 145
Developmental 147
Rational goal 148
Diagnostic questions 149
Fit and misfits 152
Adapting for better performance in the short run 155
Transforming climate in the longer run 157
Summary 159
Glossary 159
Where are you in the step-by-step approach? 160
Step 5
COORDINATION AND CONTROL 163
9 Coordination, control, and information systems 165
Introduction 165
Coordination and control systems 167
Family 169
Machine 170
Market 171
Clan or mosaic 172
Information systems 174
Event-driven 176
Data-driven 177
People-driven 177
Relationship-driven 179
Diagnostic questions 180
Fit and misfits 183
Summary 187
Glossary 188
10 Incentives 190
Introduction 190
Personal pay 195
Skill pay 196
Contents ix
Bonus-based 197
Profit-sharing 199
Diagnostic questions 200
Fit and misfits 202
Summary 205
Glossary 206
Where are you in the step-by-step approach? 206
APPLYING THE STEP-BY-STEP APPROACH
IN A DYNAMIC WORLD 209
11 Design dynamics: managing change 211
Introduction 211
Where are you in the step-by-step approach? 211
What should you change first? Make changes within each step 214
What should you change second? Make changes between steps 215
Why change? Should we live with some misfits? 215
What are the benefits of change? 216
What are the difficulties of change? 217
Managing misfits over time 220
The financial crisis 2008–10 224
Dynamic fit and time 226
The organizational life cycle 230
Summary 232
Glossary 232
12 New forms and multi-unit organizations:
building on the fundamentals 233
Introduction 233
Multi-organization: multiple units of analysis 234
The multi-organization step-by-step approach 236
Joint venture 237
Merger 239
Strategic alliance or partnership 243
Summary 245
Glossary 245
References 246
Index 252
Figures
1.1 Levels in the organizational design process page 10
1.2 The goal space 12
1.3 Making changes in the efficiency/effectiveness space 16
2.1 The strategy space 25
2.2 Locate your organization in the strategy space by rating the
levels of exploration and exploitation 34
3.1 The environment space 44
3.2 Locate your organization in the environment space by rating
the levels of complexity and unpredictability 51
4.1 The alternative organizational configurations of the firm 61
4.2 A simple configuration 62
4.3 A functional configuration 64
4.4 The divisional configuration with product and information flows 67
4.5 A matrix configuration 69
4.6 The organizational complexity space 72
4.7 Locate your firm in the configuration space 75
4.8 Locate your firm in the organizational complexity space 77
5.1 The organizational design space of structures for spanning
geography 89
5.2 Structures for managing knowledge exchange 96
5.3 Locate your organization in the geographic space by rating
its degree of local responsiveness and optimal sourcing 100
5.4 Locate your organization in the knowledge exchange space
by rating its degree of virtualization and IT-infusion 101
6.1 Task design space 113
6.2 Locate your firm in the task design space 120
7.1 The people space 127
7.2 Locate your organization in the people space 131
8.1 The leadership style space 139
8.2 Categorization of organizational climate and its effect upon
emotions 144
8.3 Locate your organization’s leadership style 149
8.4 Locate your firm in the organizational climate space 151